Monday, July 12, 2010

Clayworth v. Pfizer (Cal. Supreme Ct. - July 12, 2010)

You don't see many state antitrust decisions, much less on big-ticket items like whether there's a pass-through defense (which we settled in the federal context with Hanover Shoe) and how you allocate damages in indirect purchaser litigation (which we don't allow in federal court pursuant to Illinois Brick). Antitrust was the intellectual property of the 1970s and 80s -- everyone wanted to do it -- so if we were in that era, this case would get major play. But that era is now bygone, albeit allegedly on a comeback. I nonetheless mention the case because for the antitrust players that remain, it's a biggie.

The California Supreme Court unanimously concludes there's no pass-through defense. Which seems entirely right. That's what we do in the federal system, and it's certainly what the pro-antitrust litigation California legislature intended when it passed the relevant amendments. Yes, that rule makes damage assessments somewhat difficult, since we may be punishing a defendant twice: first by allowing direct purchasers to sue, with no pass-on defense, and then also allowing indirect purchasers to sue. But the problem isn't insurmountable, and in any event, that's what the Legislature probably wanted.

So California's a good place to bring state antitrust claims. No shocker there.